Senegalese fintech startup MaTontine has launched a nationwide pilot with the World Bank’s Consultative Group to Assist the Poor (CGAP), aiming to roll out innovative solutions that accelerate the way innovation improves and expands financial services for low-income populations in Sub-Saharan Africa.
Established in 2015, MaTontine has automated the traditional savings circles found throughout Africa, and built a software platform that enables it to work with a range of partners to provide access to small loans and related financial services for the financially excluded.
“The problem we are trying to solve is an enduring and challenging one: how to unlock access to financial services like small loans to the poor at scale. The banks and micro-finance institutions have realised that they cannot do this profitably at scale with their current infrastructure,” MaTontine managing director Bernie Akporiaye told Disrupt Africa.
“It turns out that it’s actually very difficult to profitably make small loans like US$100. Consequently, for our members the only providers of these type of loans charge between 25 per cent and 100 per cent per annum.”
MaTontine – which was recently named the winner of the Senegalese leg of the global Seedstars World startups competition – solves this problem by utilising mobile phones and its platform to digitise the benefits of traditional savings groups, reducing the cost of borrowing by 75 per cent or more.
“For our solution, we went back about century to a system used all over the developing world. It is called Tontines in Francophone Africa; the industry term is Rotating Savings and Credit Associations,” Akporiaye said.
Here’s how it works. A group of, say, 10 people, each with its own manager, contributes, say, US$10 every month into a pot. At the end of the month one member of the group collects the pot of US$100. This cycle repeats itself until everybody has won the US$100 pot.
“Our innovation is to build a digital platform that automates this whole process and incorporates a credit scoring system in order for us to facilitate small loans and other financial services like micro-insurance from our partners based on the credit score of our members. All financial transactions are done digitally using mobile phones and mobile money,” Akporiaye said.
MaTontine is now ready to make this innovation readily available through its pilot with the World Bank’s CGAP, testing how the digitisation of traditional savings circles and the use of mobile payments can significantly improve the delivery of financial products and services at scale to women and the rural poor in Senegal.
For the six-month pilot, the startup is teaming up with payment providers like Yup and Wari, financial institutions such as COFINA and Manko, and insurance providers like SUNU Assurances Vie and PMAS.
“Up until recently we were self-funded. We have however accepted grant funding from the World Bank,” Akporiaye said.
“In December 2016 we completed our last pilot, with 2,000 members including 475 active ones, to which we have granted small loans for a total amount of US$12,000, with a default rate of zero per cent. We have a goal of acquiring at least 10,000 members by the end of the year.”
Currently only operating in Senegal, MaTontine does have plans to expand throughout Francophone Africa, starting with Ivory Coast next year. Access to the platform is free, with the startup generating revenues through commissions from partners who offer products such as loans and insurance.